HPCL, IOC better than upstream companies: StanChart Sec

Rahul Singh, Head of Equity Research, Standard Chartered Securities feels Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) leaves some more room for re-rating.
 
Singh told CNBC-TV18, “Diesel price hike can be called as creeping decontrol. We need to wait and see the execution part as it still possess challenges. Post hike in diesel price, I have a more constructive view on oil marketing companies (OMCs) because I think valuations in one or two stocks within the OMCs like Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) leaves some more room for re-rating. On price-to-book terms I still see some room for a re-rating where they have traded in the past in the last six-seven years when the deregulation has been failing.”
 
“Historically, we liked the upstream companies better than OMCs. In terms of pure leverage to reform momentum which is gathering pace and could continue for next two to three months. We believe that HPCL and IOC are better than the upstream companies,” Singh said.